As Indonesia's Ministry of Finance continues to investigate irregularities in the 2018 financial statements of Garuda Indonesia, the government-run Audit Board of Indonesia (Badan Pemeriksa Keuangan, BPK) has demanded that its subsidiary Citilink cut its ties with PT Mahata Aero Teknologi, a startup tech firm that had signed up to equip all Garuda and Citilink aircraft with free onboard wifi.
Mahata is at the centre of the storm because USD240 million worth of revenue that would have been derived from it over a 15-year period appeared in Garuda's 2018 accounts as a receivable, hauling the loss-making carrier back into profitability.
"The BPK has examined and evaluated the Garuda report. The BPK has asked to cancel the cooperation between Citilink and Mahata. The BPK also recommends that [Geruda Indonesia] conduct a restatement or presentation of its 2018 financial statements," audit board member Achsanul Qasasi told CNBC Indonesia on July 9.
The BPK explained in a report on the issue that Citilink's deal with Mahata had been unlawful, as the carrier's managing director did not have the authority to act also on behalf of Garuda. "Citilink, which is bound by the agreement, does not have authority over a number of objects involved in that agreement, and this is against the law," the report said.
The carrier was ordered by the Financial Services Authority (Otoritas Jasa Keuangan, OJK) on June 28 to amend and resubmit its annual report within fourteen days.
